COGS stands for Cost of Goods Sold. It refers to the direct costs incurred in producing or purchasing the goods that a company sells during a specific period. For a restaurant, COGS includes the costs associated with the ingredients and materials used to prepare the menu items. Formula for Cost of Goods (COGS): COGS = Beginning Inventory of Goods + Purchases during the Period − Ending Inventory of Goods In simpler terms, it’s the total cost of the goods available for sale minus the value of the ending inventory. The resulting figure represents the cost of goods that were sold during the period.
Cost of Goods (COGS)
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